Sibanye Stillwater (JSE: SSW), a prominent player in the precious metals industry, has recently been navigating turbulent waters amidst a challenging market landscape.
With its share price embarking on a notable downtrend, coupled with three consecutive years of losses, investor confidence has been visibly shaken. The company’s woes have been exacerbated by a stark warning of a potential 91% plunge in annual profits, primarily attributed to the sharp decline in platinum group metal (PGM) prices, a cornerstone of its operations.
In its last financial report for the Half Year 2023, Sibanye Stillwater revealed revenue of R60.58 billion, marking a 14% decline from the previous year’s corresponding period. This downturn in the top-line figure translated into a substantial 37% decrease in EBITDA, settling at R14.15 billion, indicative of the broader challenges faced by the company.
Despite notable growth in South Africa’s gold volume, reaching an impressive 109%, Sibanye Stillwater grappled with dwindling PGM volumes across its operations. Notably, PGM volumes in South Africa witnessed a 3% decline, while volumes in the United States plummeted by a staggering 20%. As the company endeavours to navigate through these turbulent times, attention turns to its strategic initiatives and market positioning amidst evolving economic dynamics and shifting investor sentiments.
Technical
Sibanye Stillwater’s share price has been entrenched in a downtrend, a trend evident through its trading pattern within a descending channel and residing below the 100-day moving average.
Technical indicators, notably the Relative Strength Index (RSI), flagged overbought conditions, triggering a selloff from the R26.65 per share mark, coinciding with the upper boundary of the descending channel.
Amidst this downward movement, support around the R17.56 per share level is within striking distance. This level was formed after a surge in buying activity amid oversold RSI conditions in November 2023. Should the selloff persist, a retest of this support level appears likely. Conversely, a resurgence in upside momentum could see attention shift towards the 100-day moving average, potentially serving as a point of interest for traders and investors alike.
Summary
Sibanye Stillwater faces challenges with a downtrending share price amid declining profits due to falling PGM prices. With selling pressures persisting, support at R17.56 could serve as a key level of interest. However, a resurgence in upside momentum could target the 100-day moving average, reflecting evolving market dynamics and investor sentiment.
Sources: Sibanye Stillwater LTD, Reuters, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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